What Are the Benefits of Owner’s Title Insurance?

Purchasing a home is an exciting life event. It is also one that involves a significant financial investment. As such, most people purchase a homeowner’s policy to protect against damage to the dwelling’s structure or that which may occur from natural disasters, fires, or other events. But what a homeowner’s policy does not cover are intangible threats to the property, such as unpaid liens, boundary disputes, or other title defects that may arise after closing on the home loan.

Owner’s title insurance is an indemnity policy that helps protect a homeowner’s financial interest in the event title issues are discovered after closing. Purchasing an owner’s policy is optional but strongly recommended. Read on to learn some of the key benefits of owner’s title insurance.

How does owner’s title insurance work?

During the settlement process, a title search is conducted to identify any title defects, which are essentially ownership or financial claims another party may have over the property in question. While the goal of a title search is to detect any defects, there are times when undiscovered title issues surface months or years after the property is purchased. Such instances could lead to financial loss, legal fees, and even the loss of the property. An owner’s policy can help mitigate these risks and help protect the homeowner from sustaining a significant financial loss.

Why purchase owner’s title insurance?

Having an owner’s title insurance policy in place can offer the homeowner a number of key benefits should title defects arise after settlement. Some of the key benefits of title insurance include:

Protect against financial loss: Should another party prove to have a legitimate claim on a homeowner’s property, an owner’s policy would reimburse the financial loss for covered title defects up to the policy amount.

Help cover legal fees: At times, it may be necessary for a homeowner to defend their rights to their property in a court of law. Owner’s insurance can help cover court costs and additional legal expenses.

Provide peace of mind: For a homeowner, knowing that a policy is in place to help against financial loss from potential title defects can bring peace of mind to the home buying process.

How long does an owner’s policy last?

An owner’s title insurance policy will remain in effect as long as the homeowner or their heirs own the property, even if the loan is refinanced at some point. It is important to understand that an owner’s title insurance policy will only apply to title defects discovered after the loan has closed on the property in question, or only those impacting the ownership chain before the homeowner took possession.

Even when the title of a property is rendered free and clear following a title search, this is still the risk that title defects could be identified months or years after closing. To learn more about protecting your homeownership interests with an owner’s title insurance policy, please contact Linear Title & Escrow today.

Title Insurance FAQ

If you are in the process of buying a home, the term “title insurance” is one you’re likely to hear. To help provide a general understanding of what title insurance means and how it may impact your real estate investment, we’ve compiled some of the most common questions about these types of insurance policies.

Are there different types of title insurance?

There are two general types of title insurance: lender’s title insurance and owner’s title insurance. A lender’s policy protects the mortgage lender’s interest for the remaining dollar amount should the home loan become unenforceable at any point over the repayment period. An owner’s policy protects the homeowner against financial loss up to the amount of the real estate transaction should title defects arise or another party proves to have a legitimate ownership claim to the property.

Do I have to purchase title insurance?

Most mortgage lenders require homebuyers to purchase a lender’s title insurance policy. Buying an owner’s policy is entirely optional but is highly recommended, given the risks undiscovered title defects might pose to a homeowner’s property.

How much does title insurance cost?

The cost of lender’s and owner’s title insurance policies is based on the sales price and loan amount for a new purchase and the loan amount for a home loan refinance. The cost of an owner’s title insurance premium is calculated as a percentage of the purchase price of the home and corresponds with the value of the property. The cost of a lender’s policy will vary by state and/or other factors but generally averages between $500 – $2,000.

What does title insurance protect against?

Title insurance helps remunerate a homeowner or lender for financial loss in the event certain title defects are discovered after closing and such defects allow another party to have a proven and legal ownership stake. Owner’s policies may also cover all or part of legal costs should a homeowner be required to seek legal action to defend against title defects. Some of the most common title defects include:

-Undiscovered heirs

-Forgery or fraud

-Improperly probated wills

-Recording/clerical errors

-Unpaid mortgages

-Liens

-Judgments

Are title insurance policies transferable?

Owner’s and lender’s title insurance policies will remain in effect until you or your heirs sell the property or transfer ownership to another party. During a refinance, the lender will typically require the purchase of a new lender’s policy, but a re-issue rate will be established. An original owner’s insurance policy will still be in effect following the refinancing of a mortgage.

How can I purchase title insurance?

Payment for title insurance is provided as a one-time premium at the time of the real estate sale and is included in overall closing costs. 

Have other questions about title insurance policies? The Linear Title & Escrow team is ready to assist. Please contact us today for more information.

What Does a Title Search Include?

The term “title” in real estate represents the ownership rights attached to a property. It also entails the right to utilize or maintain an equitable interest in said property. When a real estate sale occurs, the title is transferred from the seller(s) to the buyer(s). For the legal transfer to be carried out, the title must be free and clear of any defects.

What is a title defect?

A title defect is any factor that prevents the proper transfer of property ownership from one party to the next. Title defects are generally identified through a title search. This investigative process takes place in the time between real estate contract ratification and the settlement (closing) of the loan. A title search seeks to identify any problems with the title as well as any other parties who may hold some ownership stake or legal rights to a property.

Who conducts a title search and how is it accomplished?

A title agent representing a title company or a real estate attorney are generally the professionals who carry out a title search. The person responsible for the title search will examine public records to screen for defects and review legal information pertaining to the property in question. This typically includes a search of municipal, county, or local tax collector records.

What does a title search look for?

A title search looks for any problem or issue (defect) that may prevent proper ownership transfer. Title defects can vary, but some of those most commonly discovered include:

-Liens or judgments

-Unpaid taxes

-Forgery or fraud

-Recording errors (in public records)

-Undisclosed heirs

-Easements or usage covenants

-Boundary disputes

-Improperly probated wills

What happens if title defects are found?

If a title defect is discovered, steps must be taken to resolve the issue in order for the real estate transaction and closing to proceed. In some instances, such as when recording errors are identified, resolving the defect is simply a matter of resubmitting the correct documentation to the appropriate office of public record. More complex types of title defects may require legal proceedings and may need to be resolved in a court of law.

A title search is integral to a real estate sale and a successful transaction. To learn more about the title search process or title defect resolution, please contact the experts at Linear Title & Escrow. 

What Do Closing Costs Include?

Closing costs are fees paid by homebuyer and the seller at the time of settlement. While every closing proceeding will incur such costs, including loan refinances, the type and amount will vary according to several types of factors. Read on to learn what closing costs might include for a buyer and a seller, and when refinancing an existing mortgage.

How Are Closing Costs Calculated?

Closing costs for home purchases, sales, and refinances are calculated based on the amount of the loan, mortgage insurance, taxes, and additional fees. In general, closing costs for homebuyers tend to range between 3 – 6% of the overall sale price, while seller costs are often between 6 – 10% of the overall sales price and include real estate commission on the sale of the property. Refinancing closing costs commonly fall between 2 – 6% of the total loan amount.

It is important to understand that the total amount of closing costs will be different for each individual case. The settlement fees for a purchase, sale, and refinance generally include the items listed below.

Buyer Closing Costs

   -Mortgage application and origination fees

   -Loan discount points (if applicable)

   -Home appraisal fee

   -Boundary survey fee (if applicable)

   -Homeowner’s insurance

   -Property taxes

   -Title search

   -Recording fees

   -Transfer taxes

   -Property taxes

    -Lender’s and owner’s title insurance

    -HOA fees (if applicable)

    -Other administrative or settlement costs

Refinance Closing Costs

-Mortgage application and origination fees

-Loan discount points (if applicable)

-Home appraisal fee

-Home inspection fee

-Mortgage insurance

-Title search

-Recording fees

-Other administrative or settlement costs

Seller Closing Costs

  –Loan payoff amount

  -Property taxes

  -Deed preparation fees

  -Courier fees

  -Title transfer fees

  -Grantor’s tax and HRRT fee (if applicable)

  -Recording fees

  -Seller concessions (if applicable)

  -Home repairs (if required)

  -Real estate commission (for agents)

  -Other administrative and settlement costs

Contact the experienced team at Linear Title & Escrow to learn more about the settlement process or for closing cost estimates.

What Factors Affect the Home Closing Timeline?

The real estate transaction begins with the acceptance and ratification of a sales contract and ends with closing or settlement. Throughout the process, a variety of steps must occur in order to move the mortgage approval proceedings along and prepare to transfer the title (ownership rights) of the property from the seller to the buyer.

On average, real estate transactions take about 45 days to close, but this timeline can be affected by a number of factors. Read on to learn what some of these factors might be and how to minimize barriers to closing while fostering the best possible scenario for settlement.

Home Appraisal

Home appraisals are third-party assessments of a home’s value and an integral part of the mortgage process. Delays related to a home appraisal may occur if any noted repairs need to be satisfied prior to closing or if a home appraises for less than expected and the contract terms must be renegotiated.

Title Defects

Title defects are issues that affect the proper and legal transfer of property ownership from the buyer to the seller. A title agent or attorney will conduct a title search to detect any problems with the title that may prevent this ownership transfer. Any title issues will likely need to be resolved before closing can occur. While there are a broad array of title defects that can arise, some of the most common include:

• Recording errors

• Unknown easements or other encumbrances

• Boundary disputes

• Judgments or liens

• Unpaid taxes

• Undiscovered heirs

• Improper probation of wills

Responsiveness to Information Requests

Throughout the contract-to-closing timeline, the lender will typically request various types of information. In addition to paperwork needed to process, approve, and prepare the loan, this documentation may include proof of homeowner’s insurance and home inspection verification, among others. Providing any requested documents or information and completing any required forms promptly can help reduce the chance of closing delays.

Funding of the Loan

To further reinstate the importance of promptly responding to any information requests, any delayed or incomplete paperwork will stall the funding of the home loan. This, in turn, can extend the real estate settlement process and cause a delay in closing. It is also essential to ensure proper wiring instructions are submitted to facilitate the disbursement of funds.

To learn more about the closing process, please contact the experienced team at Linear Title & Escrow today.

How Do You Clear a Title Defect?

A title defect is any factor that allows a person or persons to have an ownership stake in a property. Defective titles can be a barrier to the home closing process, as they must be resolved before the settlement of the real estate transaction can occur. These defects prevent the proper and legal transfer of title from one party to the next.

When title defects are detected, a process must ensue to clear or resolve the encumbrances and render the title marketable. Read on to learn how title defects are identified, the process for resolving common title defects, and how to protect your property against title problems.

How Are Title Defects Identified?

Title defects are identified through a title search, which takes place in the time between contract ratification and closing. A property title search examines the ownership history of the property through public records, screening for any liens, judgments, or other claims that could interfere with the transfer of ownership. Title searches are conducted by title agents or attorneys.

Common Types of Title Defects

While a myriad of factors can cloud a title, making it defective, there are some types of title defects that tend to be more common. These include:

-Recording, filing, or other clerical errors

-Easements or encroachments

-Liens against the property

-Improperly probated wills

-Unreleased deeds of trust

-False impersonations

-Boundary disputes

-Unidentified heirs

-Forgery

-Fraud

What Is the Process for Resolving Title Defects?

Title resolution is dictated by the type of issue discovered. After a title defect has been identified, the title agent or attorney launches a rectification process to correct and resolve the defect. Certain types of title defects, such as clerical errors, can be amended relatively quickly. In other instances, title resolution may be more time-consuming and intensive, or may even need to be resolved in a court of law.

Often, title defects surrounding recording or clerical errors are cured by submitting corrective or supportive documentation containing accurate information. Once the correct information is recorded, the encumbrance can then be released to render the title free and clear. Debt-related title problems, such as judgments, liens, or defaults on mortgages, must be paid in full and receipt of the payment must be properly recorded for defect resolution.

Protect Your Property Against Title Defects

Title agents and attorneys are trained to perform thorough title searches and identify title defects. There may be instances, however, when unforeseen or undiscovered defects arise after closing has occurred. Homebuyers can help protect their real estate investment and safeguard against the loss of their property by having an owner’s title insurance policy in place. Owner’s title insurance is a type of policy that indemnifies the property owner in the event that a title defect is discovered and their property is lost to a party with proven ownership rights. This type of policy can also help cover legal costs should court proceedings become necessary to correct title problems.

For more on title searches or title defect resolution, please contact the experienced team at Linear Title & Escrow.

How Does Owner’s Title Insurance Protect Me?

Purchasing real estate is one of the biggest investments most Americans make. Not only is your house and property a valuable financial asset, it is also where you raise your family, make lifelong memories, and the place you call home. To help protect your home, you likely carry homeowner’s insurance, possibly have home warranty policies, and take other measures to mitigate factors that may threaten your property. But what would happen should another party claim to have ownership rights to your family’s home? Here is where an owner’s title insurance policy comes into play.

What Is Owner’s Title Insurance?

There are two forms of title insurance: lender’s policies and owner’s policies. Lender’s title insurance protects the mortgage lender’s financial interests should home loan repayment default or become unenforceable. 

Owner’s title insurance is a type of indemnity insurance policy that helps protect a homeowner against financial loss, or the loss of their property, should title defects be discovered at any point after closing. Title defects are problems with the chain of title and represent another party’s ability to have some level of ownership claim to the property. Common title defects include:

  • Liens
  • Judgements
  • Recording errors
  • Fraud and forgery
  • Undisclosed heirs
  • Improperly probated wills

What Are the Benefits of an Owner’s Policy?

The level of coverage provided by owner’s title insurance varies between standard and enhanced policies. In general, an owner’s policy helps remunerate a homeowner for financial loss in the event certain title defects are discovered and said defects allow another party to have a credible ownership stake. These policies may also cover all or a portion of any legal costs should you need to go to court to defend against title defects. 

How Much Does Owner’s Title Insurance Cost?

The cost of an owner’s title insurance policy corresponds with the value of your property. It is calculated as a percentage of the purchase price of the home. Payment is provided as a one-time premium rendered at the time of the real estate sale and is part of the overall closing costs. 

Perhaps one of the greatest benefits of an owner’s title insurance policy is the peace of mind it provides when it comes to protecting your real estate asset. To learn more about title defects or title insurance, please contact the knowledgeable team at Linear Title & Escrow today. 

Facts About Refinance Closings

There are several reasons why people may choose to refinance their home loan. Refinancing at a lower interest rate could lessen a homeowner’s monthly mortgage payments. In some cases, it could enable a homeowner to cash in some of the equity accrued in the property or shorten the length of the mortgage. Still others may decide to refinance their home loan to assume a different type of mortgage to better meets their needs. Read on to learn some of the primary factors surrounding home refinance loans. 

Closing Costs for Refinance Loans

Even when refinancing an existing mortgage, homeowners can expect to pay closing costs at the time of settlement. With refis, however, the closing costs are typically wrapped into the loan. Given this factor, homeowners may not be required to bring payment to the closing table unless they choose to pay closing costs and avoid having this amount factored into their monthly mortgage payments. Visit our previous post to learn more about closing costs for a mortgage refinance.

Closing Timeframe for a Mortgage Refinance

It can be challenging to estimate the time it takes for a mortgage refinance to close, as this will vary according to the lender and will depend on each individual lender’s refinance process. Factors like home appraisals may be necessary, which could impact the time it takes to close.

Closing Disclosure Forms for Refis

A Closing Disclosure (CD) form will be submitted by the mortgage lender to the borrower at least three days prior to closing. This form outlines the financial details surrounding the borrower’s responsibility as it pertains to the closing costs, amount of the loan, loan interest rate, repayment of the mortgage, and other financial specifics. It is important to review this document in its entirety and very carefully, and to reach out to the lender right away with any questions, concerns, or discrepancies.

Refi Closing Day

Whatever the reason for a mortgage refinance might be, it is vital to be fully prepared on closing day. A valid government-issued ID will be required in order to close. Consulting the title agent or attorney conducting the settlement on what to bring and what to expect can help ensure preparedness on closing day.

To learn more about the process for a refinance closing, contact the team at Linear Title & Escrow today.

FAQ: The Closing Process for Homebuyers

Purchasing a home is one of the most exhilarating events in a person’s life. Whether you’re buying your first place, your dream house, or the home where you plan to retire, sitting at the closing table is surely a highlight along the journey called life. If you’re about to close on a new property, you may be wondering what to expect. Read on to explore some of the most commonly asked questions surrounding the closing process when buying a home.

How long does it take to close on a home?

Closings are typically scheduled about 30 to 45 days after contract ratification. This timeframe may vary, however, depending on the type of mortgage product.

What should I bring to my closing?

On the day of closing, you’ll need to bring a government-issued ID (two forms of identification may be required, in some cases) and payment for closing costs (in the form of a certified or cashier’s check).

Who conducts a real estate closing?

Closings are conducted by a title closing agent or a real estate attorney.

How much will I pay in closing costs?

Closing costs are determined by a number of factors. For buyers, closing closes are generally between 2 – 7% of the sale price of the home. 

What is included in closing costs?

Settlement costs for homebuyers vary from case to case, but often include:

   • Mortgage origination fee and loan discount points

   • Mortgage insurance

   • Appraisal fee  

   • Homeowner’s insurance

   • Pre-paid mortgage insurance

   • Property taxes

   • Transfer taxes

   • Title search fee

   • Recording fees

   • Other closing fees

   • Lender’s title insurance (generally required)

• Owner’s title insurance (not required, but highly recommended)

For more on the closing process for homebuyers, please contact Linear Title & Escrow today.

What Is Title Insurance?

Safeguarding your real estate purchase against the possibility of title defects is important whether the home you buy is brand new or several decades old. Title defects discovered after closing could indicate that other parties have some ownership claim on your property, which may lead to legal costs or even result in the loss of your home. Title insurance is a type of policy that helps protect your rights to your property as the owner if title defects are identified any time after closing. Read to learn about the primary types of title insurance and how this indemnity policy might protect your real estate investment  ¾and the place you call home.

Types of Title Insurance

Title insurance is purchased at the time of settlement. There are two main forms of title insurance, and they function independently to protect the interests of the two primary parties in a real estate sale: the lender and the homebuyer (owner).

  • Lender’s insurance:A lender’s title insurance policy protects the mortgage lender against financial loss if the home loan becomes unenforceable or if the homebuyer should default on the mortgage at any point during the repayment period. The majority of mortgage lenders require homebuyers to purchase a lender’s policy at the time of closing. 
  • Owner’s insurance: An owner’s title insurance policy is optional for homebuyers and is highly recommended. This type of policy may be purchased in a standard or an enhanced form, and serves to provide financial reimbursement if another party attempts to stake an ownership claim to your property.

What Can Owner’s Title Insurance Protect Against?

Standard and enhanced title insurance policies vary in terms of the types of title defects against which they offer protection. Title defects discovered after closing can range from the more common, such as recording errors, judgments, and liens, to zoning violations and undiscovered heirs. Title insurance policies can help cover the costs of correcting title errors and legal fees (should you have to defend your ownership rights in a court of law), and remunerate for financial loss in the event you lose the property to another party.

Consulting with an experienced title agent can help you understand the differences between standard and enhanced title insurance policies so that you can choose the option best suited to your needs. For more on the benefits of title insurance, please contact Linear Title & Escrow today.